The USDA Property Inspection Requirement is not a specific inspection performed by the U.S. Department of Agriculture but a set of essential property standards that homes must meet to qualify for USDA loan programs. These standards ensure that the property is safe, sanitary, and structurally sound. The requirements are assessed through a lender-ordered appraisal, which verifies that the home meets the minimum eligibility criteria rather than acting as a detailed home inspection.
Appraisal vs. Inspection
Understanding the difference between an appraisal and a home inspection is key. An appraisal, required by the USDA loan process, determines the market value of the property and confirms it meets USDA livability standards. Conversely, a home inspection is performed at the buyer’s discretion to identify possible repairs or hidden problems, often protecting the buyer’s interests.
USDA Property Standards
The USDA appraisal focuses on three main areas:
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Safety: Utilities like electrical, heating, and plumbing must function properly. The home must have safe access, clean water supply, and no lead-based paint hazards if built before 1978.
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Sanitation: A working septic or public sewer connection is required. The home should be pest-free and in a condition that won’t endanger occupant health.
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Structural Soundness: The foundation, roof, and overall structure must be stable and expected to last at least as long as the loan term, usually 30 years.
Common Issues Affecting USDA Eligibility
Typical issues that may cause a property to fail the appraisal include peeling lead paint (for pre-1978 homes), roof leaks, broken windows, faulty HVAC systems, missing stair handrails, and foundation cracks. Resolving these problems usually involves repairs or replacement to meet USDA standards.
Buying a Fixer-Upper with USDA Loans
Standard USDA loans generally do not allow purchase of homes needing significant repairs. However, the USDA Renovation Loan program permits the inclusion of repair costs in the mortgage, enabling buyers to renovate after purchase.
Tips for Navigating the USDA Property Inspection Requirement
- Work with a real estate agent experienced in USDA loans to identify eligible properties.
- Consider obtaining an independent home inspection before making an offer to avoid surprises.
- Be prepared to negotiate necessary repairs if the appraisal identifies issues.
Additional Resources
Learn more about the USDA loan program here and understand the role of home inspections via our home inspection contingency guide.
FAQs
Who pays for the USDA appraisal?
The homebuyer usually covers the appraisal fee, typically between $400 and $700.
What if the property fails the appraisal?
Buyers can negotiate repairs with the seller, apply for a USDA Renovation Loan, or walk away depending on contract contingencies.
Are outbuildings like barns subject to USDA standards?
Outbuildings influencing the property’s value must generally meet structural standards, while minor sheds may require removal if unsafe.
For detailed USDA appraisal guidelines, refer to the USDA Single Family Housing Guaranteed Loan Program and Consumer Financial Protection Bureau’s advice on choosing a home inspector.
